Video Transcript
Ed Coyne: We talk about the market as physical first, whether its gold or silver. Right now, you're seeing the platinum and palladium market start to percolate back up. Uranium, copper and all the physical assets are first a core allocation. Particularly when you think about gold, gold is a wonderful diversifier in a portfolio. It has a proven track record, people know what it is, and it has a history of zigging when the markets are zagging.
When people are looking at commodities for the first time, you have to ask them why. And the question is, are you looking to diversify your portfolio and maybe go risk off, or are you looking to be more opportunistic and go risk on? And if you're looking for the risk-on side, going beyond the physical and going into the miners themselves can be much more opportunistic. They can still be volatile. They are companies, things go bump in the night, and there is a risk of nationalization. All kinds of things can happen, but when the margins, dividend yields and enterprise values over EBITDA all start rolling together, we also like the miners.
For those who want to be tactical and opportunistic, I would say look at the miners, but start with the physical markets first and then graduate your way into the underlying mining stock second.
Investment Risks and Important Disclosure
Whether a particular allocation is appropriate for an investment portfolio depends on several factors including an investor’s risk tolerance, investment objectives, time horizon, income requirements and overall financial situation. Investing in physical commodities involves additional risks like the possibility for substantial price fluctuations over a short period of time and a relatively limited and unregulated market.
Relative to other sectors, precious metals and natural resources investments have higher headline risk and are more sensitive to changes in economic data, political or regulatory events, and underlying commodity price fluctuations. Risks related to extraction, storage and liquidity should also be considered.
Gold and precious metals are referred to with terms of art like "store of value," "safe haven" and "safe asset." These terms should not be construed to guarantee any form of investment safety. While “safe” assets like gold, Treasuries, money market funds and cash generally do not carry a high risk of loss relative to other asset classes, any asset may lose value, which may involve the complete loss of invested principal.
Past performance is no guarantee of future results. You cannot invest directly in an index. Investments, commentary and opinions are unique and may not be reflective of any other Sprott entity or affiliate. Forward-looking language should not be construed as predictive. While third-party sources are believed to be reliable, Sprott makes no guarantee as to their accuracy or timeliness. This information does not constitute an offer or solicitation and may not be relied upon or considered to be the rendering of tax, legal, accounting or professional advice.